Although income is usually what people think of first when they think of social class, there are many other elements that are a part of social class. All of these components both exemplify social class inequality and they exacerbate it. Please read about each element below. Remember to think about what an average American looks like and how your family compares. I want you to have a better understanding of where your family fits compared to the average American when the lesson is finished.
Wealth is tricky to understand. It is everything that a household owns, such as the home, vacation home, cars, 401K, savings, stocks, jewelry, etc…But, you must subtract what the household owes. So, if my house is $200,000 but I owe $160,000 then my wealth is only $40,000 on the house.
Try the following exercise on your own:
First, hypothesize, how much of the wealth (the pie) in the US do you think Each quintile (person) has:
Bottom 20%:______ 2nd 20%_______ 3rd 20%________ 4th 20%_______ 5th 20%_______Top
Second, write how much you think each quintile should have?
Bottom 20%:______ 2nd 20%________ 3rd 20%________ 4th 20%_______ 5th 20%_______Top
After you have finished answering the questions above, watch this video:
What is the reality? How is the wealth actually divided?
1. How does your guess about compare to how it is actually distributed? (Here is the Google form for this lesson – I recommend opening this in a new window and then answer each question after you read the info.)
This video from the ST. Louis Fed also explains the disparity in wealth in the US (2019).
The overall conclusion about wealth is that the disparity of wealth is greater than that of income (see the pie graph below). The top 1% of America owns 34% of everything. The top 10% owns 70%. And half of America owns 96% of everything. In other words, the bottom half, 50% of America, owns almost nothing. They have no money saved – for retirement or otherwise. Once you deduct their debts, they have almost no equity – from their homes, or possessions, or bank accounts.
The average wealth of Americans
From DQYDJ (Don’t Quit Your Day Job)
… is a finance and investing website founded in 2009 that posts about investing and adds interactive features, tools, and calculators to their posts.
The DQYDJ 2020 analysis of wealth in America calculates the median net wealth for Americans at $121,000:
The median is up from this 2010 Huffington Post report which analyzed a Congressional Research Bulletin about wealth, “The median household net worth — the level at which half the households have more and half have less — was $77,300″ For a much more detailed analysis of wealth, see this post from business insider.
Wealth is more than money
It might be difficult to know how much wealth your family has, so here is a different way to think about it:
- how much the total household net worth is
- owning a house or second home
Leave a Comment